"We should have known better", UNCTAD SG Supachai told the Finance Ministers and Central Bank Governors of the G7
23 Feb 2009
"We should have known better", UNCTAD SG Supachai told the Finance Ministers and Central Bank Governors of the G7 in Rome on 13 February, referring to the causes of the financial crisis and how it might have been prevented.
Contrary to traditional wisdom, which holds that each crisis is different from its predecessors and thus unpredictable, he said that the mechanism leading to the crisis is always the same, regardless of the complexity or originality of the financial instrument at its centre.
In today´s globalized and technologically driven world, however, all investors are exposed to the same shocks and risks and adopt herding behaviour in response to volatility, Supachai said.
This - along with greed, blind faith in the market, and insufficient regulation - is what caused the crisis, which was in fact all too preventable. Regulatory overshooting - swinging from over-regulation to deregulation and back again - should be avoided.
There are lessons to be learned here from air safety regulators, who pay special attention not just to plane crashes - which are after all fairly rare - but also to the near-misses. In particular, the current crisis provides an opportunity for regulatory reform that should not be wasted, he added.
UNCTAD SG Supachai (centre) in
In his remarks, Mr. Supachai also urged the world not to allow the food crisis to be pushed aside by the financial turmoil. He stressed the urgent need for long-term efforts to help
Declining agricultural productivity on that continent, compounded by falling investment and ODA in agriculture, were among the contributing factors to the food crisis. Greater South-South cooperation and investment could play a key role in redressing the situation, he said.
Source:UNCTAD
